Rail deliveries of U.S. oil continue to surge

In this July 25, 2014 photo, an oil train moves through the area South of St Paul, Minn. Railroad documents released by the state Department of Public Safety show about 50 trains carrying crude oil from North Dakota are passing through Minnesota each week.(Photo: Connor Lake AP)

Amid a boom in U.S. oil production, the amount of crude oil and refined petroleum products moved by rail continues to climb.

There were 459,550 carloads of oil and petroleum products transported during the first seven months of this year, up 9% from the same period in 2013, according to the Association of American Railroads.

More than half of these carloads carried oil, moving 759,000 barrels of crude per day and accounting for 8% of U.S. oil production.

The surge in oil trains began in mid-2011. At that time, weekly carloads of oil and petroleum products averaged about 7,000. In July, they reached nearly 16,000, according to the AAR.

The use of horizontal drilling and hydraulic fracturing or fracking has made it possible to extract huge amounts of oil from underground shale deposits. The Bakken Shale, mostly in North Dakota, accounts for much of the growth in U.S. oil production. One of every eight U.S.-produced barrels comes from North Dakota, now the second-largest oil producing state.

Between 60% and 70% of the state's oil was moved by rail to refineries during the first half of 2014, according to the North Dakota Pipeline Authority.

The Department of Transportation proposal will require the phaseout, within two years, of tens of thousands of tank cars unless they are retrofitted to meet new safety standards. It will also require speed limits, better braking and testing of volatile liquids, including oil. It will require that cars constructed after October 2015 have thicker steel.

The DOT proposed rule, which will take months to finalize after a 60-day comment period, applies to shipments with at least 20 rail cars carrying flammable fuels, including ethanol.

In May, an oil-carrying freight train derailed in Lynchburg, Va., spilling 30,000 gallons of oil into the James River. Last year in Lac-Megantic, Quebec, an oil train exploded and killed 47 people.